Medtronic plc (MDT) Earnings Call Transcript & Summary

Last question here would be just when you look at the growth profile of diabetes, the company spoke to 500 basis points of share loss, grew 9%, certainly improved from COVID trends, but still tracking below market, overall market growth rates. When you think about 780G, the InPen solution, Zeus Guardian 4, the new portfolio coming in, what is your view on where growth can trend and even sort of stability in share over time?

Yes. There's a couple of things go on there, Anthony. First of all, we're not participating in the full market that characterizes that growth. We're not really in the stand-alone CGM market, for example, which is propelling a lot of the growth. We did have very strong growth in pumps quarter-on-quarter. But this is somewhat of a razor-razor blade business, where in prior quarters when we had share loss on the installed base, we're not getting that consumable sale. People aren't buying infusion sets, reservoirs and CGM products. So while we're building back up that patient installed base with both new starts as well as re-upping patients to new therapies, it just takes some type for those consumables to recover. So we're actually gaining share within the pump segment, which will accrue to a larger share gain within the segment we planned. Of course, with InPen, we're going into a new segment, a broader segment. And for those multiple daily injectors who are using CGM, that combination of a real-time CGM and a pen that counts your insulin dosing, when we add further kind of open-loop meal handling to that solution, including Nutrino, I think it's a really unique solution for patients who just don't want to be on an insulin delivery device.

And a good segue to go over to cardiovascular. I think a good place to start would just be Micra, again, coming off another strong quarter, annualizing $400 million at the end of fiscal 4Q, 74% growth, which is certainly significant. But there's also talk about that having a halo effect on other high-powered solutions. So maybe just an update on Micra and how that's benefiting other powered solutions.

Look, I think the entire CRM profile has gone up a lot in the minds of customers. We're at a 10-year high per share, and it's been really across the portfolio. Things like TYRX, a really great exclusive solution that has been super helpful during the pandemic, where people just were worried about rehospitalization, and that's grown really faster than we had seen in prior quarters before the pandemic. Some of the remote capabilities are programmed with a bias to monitor, the bias being the very disciplined patients. That's really helped the workflow. And a lot of times, hospitals or our own people are interrupted to go check the device before you go for an MRI. We can do that now remotely. So that capability in the feature has really been fantastic. But within the high-powered business, it's winning on its own right. We have this heart failure triage program, which helps reduce rehospitalization for patients, and a really nice exclusive is the ability to pace people out of an arrhythmia. So if you're having a tachycardia, the ability to really customize -- you and I might respond differently depending on the kind of nature of our arrhythmia to the pacing algorithm. And our algorithm learns what works, remembers that. So next time the person gets an arrhythmia, they can successfully more quickly pace them out of it and not have to deliver a shock. And the shock is really what people don't want to have happen. But really across the board, whether it's the patient solution side of things, high power, low power, the business is really doing exceptionally well right now. And of course, we've got some new products coming too. We're filing this quarter for the extravascular ICD for CE Mark. And the trial is going well, and we expect that to be in the European market in about a year. And then a year after that, we'll see the U.S. market entry.

That's a great overview and a little bit of difficulty here on camera, but I'm still piped in. In terms of staying on the arrhythmia side and maybe thinking a little bit more about cardiac ablation trends, certainly, the portfolio, in terms of the pipeline, is very positive. And maybe just to segue a little bit into 2 exciting sort of launches, one would be DiamondTemp and sort of talk about that a little bit on the cryo side. And then eventually look to pulsed field ablation. So a little bit on your views early on here for DiamondTemp and then the sort of expectations for PFA across ablation broadly.

Yes, sure. Look, I'd say cryo is also a growth driver for us now. We're seeing a new indication coming up for first line. We hope that this first half of the year. That is, rather than trying people on anti-arrhythmic drugs, you go right to ablation. And we have peer-reviewed data now published in New England Journal of Medicine, our own study, an independent study and a third study that came out last summer, all pointing to a market benefit for that earlier intervention at that patient cohort. DiamondTemp has been gaining acceptance throughout Europe, where we placed a lot of capital in the fourth quarter, ramping up production of catheter for the U.S. And what that product does for us is it puts us in the part of the market we're not participating in. We're really not in the point-by-point or what we call substrate ablation where you're going after things other than the anatomical use, where you stick it into the balloon catheter, today, which is roughly 20% of the market. We're just isolating the pulmonary vein sleeve, now we can go to the roof of the atrium. We can go into the appendage. We can go to the isthmus, the tricuspid, different foci where you have these arrhythmias be treated. And DiamondTemp allows us to do that in real-time temperature management. We get a real-time temperature that helps us to really augment the power just the right amount and titrate the amount of injury we're doing in a very efficient lesion set. And it's really fantastic. It's not as efficient as what PFA promises to do, where we have a nonthermal. It's not cold, it's not hot, it's electroporation that we're using, which can permeate the cells and allows us to do everything you can do with RF today. And even things that aren't done well with RF today, like, for example, ventricular arrhythmias where we get to that thick heart wall muscle, our PFA technology is not -- it's very selective just to the heart muscle. It doesn't take out adjacent structures. You don't need to amp up power and risk charring or scarring or any of those kinds of things that can happen in the ventricle. It opens up that whole potential for ventricular arrhythmia ablation, not just that which is in the atrial chamber. So the Board, whether it's right now for expanding the first line, getting paroxysmal and persistent indications for cryo, entering the point-by-point ablation market with a catheter today that's much, much more efficient and then bettering that still, disrupting the entire field with pulsed field ablation. We think we really have a great growth driver for many, many years in the cardiac ablation business.

Maybe just to round up this part of the discussion with me. When you think of cryo, RF and PFA, how do you see sort of mix trending in ablation overall? And maybe just to recap on that TAM opportunity, so when we think about those 3 on the ablation front, how does that size out potentially in terms of dollars?

Now so today, the market is about a $7 billion market, including the navigation systems. So we see that growing by 2025 to somewhere in the $10 billion range. And we're participating in roughly about $5 billion of that today. So we'll get to participate in the entire market as we enter with both the DiamondTemp catheter and the Micra PFA. And with PFA, of course, we have this opportunity to take a differential share position just given the efficiency and the safety of what that technology promises to be. We're in the pivotal trial right now. A huge enthusiasm for enrollment. It's going very strongly. So I think we've got a bright future ahead of us in ablation.

Two quick topics I want to get to. We have about 5 minutes left. And first would be renal denervation, and we can round out with a quick -- some questions on TAVR. On the RDN side, strong data coming out of the registry EuroPCR on the -- on an ON MED subset of patients, very positive data out to 2-plus years. Obviously, we have the ON MED study coming later this year. So maybe just your -- a recap of the data out of EuroPCR and your expectations overall heading into later this year as it relates to the pivotal readout for ON MED.

Sure. Well, a couple of things, there, Anthony. Now we've really been focused on keeping that registry open and going ever since we initially stopped the trials for RDN as we retooled into these newer studies that you were referencing. And in that registry data, now we have really, importantly, almost 10,000 patient years of data. I think it's 9,500, and we have it out for a long time. So good density of data showing excellent efficacy that's been durable, that's 3 years now -- nearly 17-point drop in office blood pressures, systolic office blood pressure, which is huge and we sustained that for 3 years when we asked a lot of questions. What we also did, though, is the clinical trials, the ON MED, OFF MED trials we used for pivotals, are getting narrow patient populations. You do that to reduce all the kind of variation you're going to see. But we did -- in PCR, we did, I think, called a win-ratio analysis that said what kind of health improvement do you get? Pick a way of measuring that. You can use blood pressure either through ambulatory or office blood pressure or reducing the burden of medication for those patients to get those outcomes. And we did it in patients that are typically the kind that you put into pivotal clinical trials, people with kidney disease, people with diabetes, people with advanced age. And it didn't matter what their underlying condition was. It worked equally well for all those patients, which is important to payers who are going to make these decisions about who's this for. And I think we're going to see really more patients who are looking for secondary prevention of cardiovascular events being the ones that have the lowest kind of treatment inertia, for a therapy like this. Can you get the benefit in those patients despite the fact that the pivotal data will be done in patients that are generally younger and healthier than what will probably happen in practices and what we get paid for. So really critically important data to get out there, and it looks really very, very promising as well.

We have a few moments left. I do want to touch on the 2-year CoreValve data at ACC and certainly continues to show equivalency to surgical valve replacement. It's certainly expansive when you think about the opportunity in low risk. And so maybe your views on how that data is being accepted out there in the field. And sort of what does it do for the low-risk opportunity for CoreValve specifically?

Yes. Look, I think it's an important question. For lower-risk patients, surgery has been an excellent option, some excellent operation. And at least in the competitor data set, it didn't look so good. You saw this catch-up that happened, where by 2 years, the loss of superiority, and it's really a late catch-up on mortality and some stroke catching up. And some other findings that were concerning, like the valve having a rate of thrombosis, which is in excess to the surgical valve, the hemodynamics being worse than surgical valves overall. And certainly, in those with thrombus in the valve leaflets, that was a worsening condition. All that leads toward are you going to have patient-prosthesis mismatch down the road, which can lead to heart failure and even mortality? Are you going to have poor valve durability in those younger patients? That maybe a problem. We're just not seeing that in our low-risk patients. We saw at the outset and at 2 years, the full data set, superior outcomes on things like valve hemodynamics. We get lower gradients, which portends good durability, avoidance of patient-prosthesis mismatch. And really none of that lethal thrombosis concern that was showing up at other data sets. So I think it bodes well for us. Our challenge has been reducing pacemaker rates, a number of different data set, and we got that down reliably and reproducibly into single digits as well, which is extremely important to younger patients. So I think exercise capacity, a low gradient, good durability, avoidance of pacemakers, all those things are appealing to both doctors and patients in that low risk or any risk category of patients.

And with that, Sean, we are just about at the 25-minute mark. I want to thank you this year for joining us at the 2021 virtual conference. We wish you and your team the best for the rest of the year, and we look forward to our next meeting.

Thanks, Anthony. Appreciate the opportunity.

Thank you, Sean.